Exhibit 99.1
[LOGO] Blue Rhino Corporation
Blue Rhino Posts Record Third-Quarter Results;
Third Quarter Diluted EPS Climbs to $0.22 From $0.12 in the Prior Year Period;
Same-Store Cylinder Transactions up 23% in Q3
Q3 Highlights:
- Cylinder exchange revenues increase 33%
- Gross margin improves to 21.4% from 18.4% in the prior year
- Litigation settlement contributes approximately $2.5 million to income
- $5 million pre-payment of Sub-Debt
- Successful launch of new SkeeterVac(TM) product
- Blue Rhino reaffirms full-year guidance
WINSTON-SALEM, N.C., May 27 /PRNewswire-FirstCall/ --
Blue Rhino Corporation (Nasdaq: RINO), a leading national provider of branded
propane cylinder exchange and complementary propane-fueled products, today
announced that net income increased to $4.3 million, or $0.22 per fully diluted
share, for its fiscal third quarter ended April 30, 2003, from $1.8 million, or
$0.12 per fully diluted share, for the third quarter of last year. Earnings were
positively affected by a net $2.5 million litigation settlement, which was
partially offset by $931,000 in debt restructuring charges related to a partial
pre-payment of subordinated debt. Excluding these items, fully diluted earnings
of $0.14 per share exceeded the prior year by 17%.
(Logo: http://www.newscom.com/cgi-bin/prnh/20011127/CHTU007LOGO-a )
Net revenues were $59.9 million compared to revenues of $58.9 million in
same period a year ago, as the company continued to experience strong demand in
its cylinder exchange segment. Gross margins improved to 21.4% in the third
quarter of fiscal 2003 from 18.4% in the same period of the prior year, as both
the cylinder exchange segment and products segment benefited from improved
margins.
"Blue Rhino's strong performance in the third quarter demonstrates that we
are executing according to our plan," said Billy D. Prim, chairman and chief
executive officer. "We experienced continued improvement in cylinder exchange
revenues compared to the prior year despite soft consumer spending and tough
comps from the prior year's substantial growth during the same quarter. We
believe the Overfill Prevention Device (OPD) valve regulations that went into
effect in April 2002 continue to positively affect our business as cylinder
exchange revenue and same-store results indicate that more and more consumers
are trying cylinder exchange, and the majority of those who try it continue to
utilize the convenience of our service.
"We remain optimistic about prospects for the fourth quarter of our fiscal
year as we continue to leverage our industry leadership," Prim said. "We will do
this by capitalizing on the continuing growth of cylinder exchange within the
overall propane market, using our retail relationships to cross merchandise
cylinder exchange with our complementary propane-related products and leveraging
our established infrastructure that we believe is one of the most advanced and
efficient direct-store delivery systems servicing retailers today."
Cylinder Exchange Same-Store Units Increase; Margins Improve
For the quarter, revenues from cylinder exchange rose to $36.3 million, a
33% increase from the prior year. Blue Rhino's cylinder exchange transactions
totaled 2.3 million units in the third quarter, a 36% increase from 1.7 million
units in the same period a year ago. Same-store cylinder exchange transactions
drove the volume gains, increasing 23% over last year's third quarter. Cylinder
exchange gross margin increased to 27.6% in the third quarter from 26.8% in the
third quarter of fiscal 2002, despite record high propane prices that occurred
during the quarter.
"Our results demonstrate that our propane price hedging program initiated
during fiscal 2001 has helped us maintain cylinder exchange margins in the 25%
range during times of propane price surges," Prim said. "Margin trends were also
positively impacted by reduced cost of materials including valves and cylinders.
We are starting to realize efficiencies from the acquisition of several
distributors in November 2002 that serviced territories comprising approximately
45 percent of our cylinder exchange revenues. Our plan of reducing duplicative
processes and costs, while promoting best practices is on schedule. The success
of our hedging and purchasing strategies is reflected in our ability to improve
margins during the third quarter, despite the fact that propane prices rose to
their highest levels in more than a decade. I am confident the impact of these
strategies along with our distributor acquisition will continue to provide
opportunities for increased operating efficiencies, which in turn will
contribute to our goal of providing long-term value for our shareholders."
Successful Launch of SkeeterVac(TM)
Blue Rhino had a successful launch of its SkeeterVac(TM) product in the
third quarter of fiscal 2003. The product is a mosquito eradication appliance
that utilizes propane to attract and kill mosquitoes. The unit does not require
electricity or batteries, unlike many competitive products, and it provides up
to an acre of coverage at a competitive price point. It is being marketed
through major retailers including Sam's Club, Target.com and Wal-Mart.com.
Product Sales Shift/Operating Expenses Rise
Blue Rhino's third-quarter product sales totaled $23.6 million, an
expected 26% decrease from $31.7 million for the same period a year ago. The
decline was due primarily to a shift in sales of grills to the second quarter of
this year from the third quarter a year ago, as a major customer took delivery
earlier this year. Product segment gross margins increased to 11.8% from 11.1%,
due primarily to a greater percentage of higher-margin products in the mix of
products sold.
During the third quarter, selling, general and administrative expenses
increased, as expected to $6.3 million from $5.0 million a year ago. This
increase was due primarily to start-up and developmental costs for our new
products and increased personnel costs associated with managing the growing
cylinder exchange segment. Depreciation and amortization expenses increased to
$2.3 million from $2.0 million for the same period last year due primarily to
increased depreciation expense resulting from an increase in cylinders and
displays used in our cylinder exchange segment.
Inventory Program; Subordinated Debt Payment
Blue Rhino continued its inventory build of primarily cylinders and valves
to support the upcoming peak-grilling season and believes it has sufficient
inventory to service the expected seasonally strong demand.
Blue Rhino also pre-paid $5 million of its 13% subordinated debt and
incurred a $931,000 non-cash refinancing charge that is reflected in interest
expense. As a result, interest expense increased to $2.3 million from $1.6
million for the third quarter in the prior year. The company intends to pre-pay
the remaining $10 million of its outstanding subordinated debt in the fourth
quarter, and will incur additional non-cash expenses of approximately $1.7
million in connection with this prepayment.
Solid Nine-Month Results
For the nine months ended April 30, 2003, net income totaled $6.4 million,
or $0.34 per diluted share, compared with $1.2 million, or $0.09 per share, for
the first nine months of fiscal 2002. Net revenues for the nine-month period
increased 29% to $172.8 million from $134.2 million for the same period in the
previous fiscal year. The revenue increase was driven by same-store cylinder
exchange transactions, which increased 34% over the prior year. The revenue
increase was comprised of a 53% gain in cylinder exchange revenue and a 4% rise
in products revenue.
Results for the nine months were also affected positively by a net $2.5
million litigation settlement, which was partially offset by $931,000 in debt
restructuring charges related to the partial pre-payment of subordinated debt.
Excluding these items, fully diluted earnings of $0.26 per share reflects almost
a three-fold improvement over the prior year.
Income Taxes
Blue Rhino has net operating loss carryforwards of $43 million from fiscal
2002 for federal income tax purposes, which will be used to completely shelter
federal income taxes for fiscal 2003. Based on its currently anticipated net
income for fiscal 2003, 2004, and 2005, Blue Rhino currently expects to pay
income taxes in fiscal 2004 on a partial effective tax rate and on a full
effective tax rate in fiscal 2005. Blue Rhino is analyzing for GAAP reporting
purposes the income tax expense effect for fiscal 2003 and expects to transition
to report on a full effective tax rate of 39% in fiscal 2004.
Reaffirms Guidance for Fiscal 2003
For the fiscal fourth quarter ending July 31, 2003, Blue Rhino currently
expects revenues in the range of $87 million to $92 million, resulting in
pre-tax earnings per share between $0.61 and $0.63, including the one-time item
of refinancing charges associated with the pay-down of subordinated debt.
Pre-tax earnings per share not including this one-time item are expected between
$0.70 and $0.72.
For the fiscal year ending July 31, 2003, the company is reaffirming
guidance. Blue Rhino expects revenues in the range of $260 million to $265
million, resulting in pre-tax earnings per share of $0.95 to $0.97, including
the one-time items of refinancing charges associated with the pay-down of
subordinated debt, which would be partially offset by proceeds from a litigation
settlement. Pre-tax earnings per share not including these one-time items are
expected between $0.96 and $0.98.
For the fiscal year ending July 31, 2004, the company currently expects
pre-tax earnings growth of at least 20% and double-digit revenue growth in the
core cylinder exchange business.
Blue Rhino's conference call to discuss third-quarter and year-to-date
results and future guidance is scheduled for 10:30 a.m. EDT today, May 27, 2003.
This call will be available live and by replay over the Internet at
www.streetevents.com and at the Blue Rhino website at www.bluerhino.com.
About Blue Rhino
Blue Rhino is a leading national provider of branded propane cylinder
exchange and complementary propane-fueled products to consumers. Blue Rhino
cylinder exchange is offered at leading home center/hardware, mass merchants,
grocery and convenience stores, with branded cylinder displays at more than
27,000 retail locations in 48 states plus Puerto Rico. Cylinders are delivered
to retailers through a national network of both independent and affiliated
distributors. The company's propane-fueled products segment is focused on
appliances such as grills and patio heaters that use cylinders as their fuel
source. These products are sold through many of the same retailers that offer
the company's branded cylinder exchange service. The company's stock is quoted
on The Nasdaq Stock Market, Inc. under the symbol RINO. For further information
regarding Blue Rhino, visit the Blue Rhino website at www.bluerhino.com
This press release contains forward-looking statements that relate to Blue
Rhino's plans, objectives and estimates. The terms "should," "believe," "plan,"
"expect," "anticipate," "estimate," "intend" and "project" and similar words or
expressions are intended to identify forward-looking statements. These
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and speak only as of the date of this
release. Blue Rhino's business is subject to numerous risks and uncertainties,
including: that its significant retail relationships are generally nonexclusive
and terminable at will; that it relies on a limited number of distributors; its
ability to manage growth; its ability to place Blue Rhino cylinder exchange at
additional retail locations, its ability to protect its intellectual property
and strengthen its brand; its ability to obtain an adequate supply of cylinders
that comply with applicable guidelines; its ability to mitigate the effects of
high propane commodity prices successfully; its ability to launch new products
and services successfully and the effect of new safety guidelines on consumer
demand for cylinder exchange. These and other risks and uncertainties detailed
in its most recent Annual Report on Form 10-K and in other filings with the
Securities and Exchange Commission could cause actual results and experience to
differ materially from those expressed or implied by any of these
forward-looking statements. To the extent permitted by applicable law, Blue
Rhino makes no commitment to update any forward-looking statement or to disclose
any facts, events, or circumstances after the date of this release that may
affect the accuracy of any forward-looking statement.
BLUE RHINO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
As of April 30, 2003 and July 31, 2002
(In thousands)
April 30, July 31,
2003 2002
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $2,745 $1,563
Accounts receivable, net 24,279 25,329
Inventories 26,906 11,035
Prepaid expenses and other
current assets 7,766 3,081
Total current assets 61,696 41,008
Cylinders, net 51,029 37,004
Property, plant and equipment, net 36,733 30,477
Intangibles, net 62,311 31,988
Other assets 1,511 2,896
Total assets $213,280 $143,373
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $25,683 $19,969
Current portion of long-term debt
and capital lease obligations 5,418 2,013
Accrued liabilities 4,770 3,770
Total current liabilities 35,871 25,752
Long-term debt and capital lease
obligations, less current maturities 54,397 39,259
Total liabilities 90,268 65,011
Stockholders' equity 123,012 78,362
Total liabilities and
stockholders' equity $213,280 $143,373
Blue Rhino Corporation
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended April 30, 2003 and 2002
(in thousands, except per share data)
Three Months Ended Nine Months Ended
April 30, April 30,
2003 2002 2003 2002
(unaudited) (unaudited)
Net revenues $59,900 $58,933 $172,770 $134,238
Operating costs and expenses:
Cost of sales 47,078 48,091 135,531 105,808
Selling, general and
administrative 6,311 4,975 21,103 14,687
Depreciation and amortization 2,342 2,021 6,767 5,812
Total operating costs and
expenses 55,731 55,087 163,401 126,307
Income from operations 4,169 3,846 9,369 7,931
Interest and other expenses (income):
Interest expense 2,308 1,585 4,943 4,736
Loss on investee -- 11 455 689
Other, net (2,444) (114) (2,540) (366)
Income before income taxes 4,305 2,364 6,511 2,872
Income taxes 15 10 45 36
Net income 4,290 2,354 6,466 2,836
Preferred dividends -- 537 71 1,644
Income available to common
stockholders $4,290 $1,817 $6,395 $1,192
Earnings per common share:
Basic $0.24 $0.15 $0.40 $0.10
Diluted $0.22 $0.12 $0.34 $0.09
Shares used in per share calculatio ns:
Basic 17,740 12,431 15,985 12,248
Diluted 19,723 14,752 18,999 13,731
Supplemental Information
Three Months Ended Nine Months Ended
April 30, April 30,
2003 2002 2003 2002
(unaudited) (unaudited)
Cylinder Transactions 2,306 1,693 6,366 4,473